Ministry of Finance on Thursday in a statement said that there would be no GST levied on annual subscription or fees charges for lodging in hostels under educational institutions of the country.

According to a PIB statement, there were rumours that 18 per cent GST would be charged on annual subscription charged for lodging in hostels. (Image: PTI)

GST impact on education: Soon after Prime Minister Narendra Modi launched the Goods and Services Tax (GST) on July 1, there were many misinterpretations over the sectors exempted from the new tax regime and this also churned the education sector – whether it was free from the new tax regime or not. Considering the anxiety in the student community, Ministry of Finance on Thursday in a statement said that there would be no GST levied on annual subscription or fees charges for lodging in hostels under educational institutions of the country. According to a PIB statement, there were rumours that 18 per cent GST would be charged on annual subscription charged for lodging in hostels, which the statement said ‘is not true.’ “There is no change in tax liability relating to education and related services in the GST era, except reduction in tax rate on certain items of education,” the statement added further.

The ministry statement also made it clear that services an educational institute provides to its students, faculty and staff are fully exempted from GST. The release further explains that the educational institutions has been defined as an institution imparting preschool education and education up to higher secondary school or equivalent or, education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force or, education as a part of an approved vocational education course.

You might also want to see this:

Keeping the above factors in mind, the ministry stated that the services of lodging in hostels provided by all such educational institutions do not fall under the criteria of the new tax regime. “Annual subscription/fees charged as lodging/boarding charges by such educational institutions from its students for hostel accommodation shall not attract GST,” the report concluded.

Arun Jaitley-led Union Finance Ministry and the GST Council have always been rigid on exempting educational sector from the ambit of GST. However, there are some items including school bags and others that have been taxed under the new GST regime.